Guest Post: Bernanke In A Box

His statement spoke volumes without saying anything. Yes, he disappointed the hardcore debasement enthusiasts called stock investors, but only at first. In between the lines of what he did say, it was crystal clear: Chairman Bernanke wants to do more QE. “Want” is not really the right word because it doesn’t really go far enough into Bernanke’s canon. I think it is abundantly clear he believes the Fed needs to do it as soon as operationally possible.

His concern on the economic issues is expected – anyone with rudimentary economic knowledge knows long-term unemployment can have lasting productive and social impacts or “scars”. He still seems confused about those headwinds, but at least has resigned himself and monetary policy to the fact that they are very real.

Rather, his attention to “financial uncertainty” and his view of the damage to “expectations” that comes with it is what really stands out now. Because the Fed is wedded to the rational expectations theory, financial uncertainty can become ingrained into investor psychology, flowing through to consumers and businesses. If consumers believe banks will be in trouble in the near future, they will act on those fears today. It is a mortal threat to the carefully cultivated, though utterly useless, appearance that everything is normal and good. The Fed has created trillions of dollars so that stocks will signal a robust future – and consumers and businesses will act today in the expectation of validity to that rosy, rainbow vision.

The beginning stages of another financial crisis or credit crunch change those expectations radically. This has to be nipped now, long before it permeates too far into the consciousness of the populace (not just in the US, but globally).

“We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September.”

He said QE 3.0, without really saying it. The markets, seeing the enlarged schedule for the September meeting and interpreting the likelihood of heavy discussions, have gotten the message. Stocks threw off the daily mortal struggle that is life as Bank of America and bid for the QE future that is now September (good riddance to August apparently). Gold prices followed on those expectations of a resumption to the willful and wanton dollar destruction that QE purely represents.

If the Chairman can influence a major market rally without ever having to face the growing dissent within the FOMC ranks, then his speech has proven to be a stroke of genius. That is the essence of rational expectations, making others believe you have magical powers so that they do your bidding without any actual work or direct engagement on your part.

But there is a huge downside to waiting, and Bernanke knows it. The financial crisis grows while the economy is sliding further into contraction. Time is not on his side.

So why does he wait?

Simple, Bernanke and QE is in a box – conditions currently in the wholesale money markets, especially the repo market, will not suffer more QE. As the unsecured Fed funds and eurodollar markets have effectively frozen for banks outside the primary dealer network, wholesale funding has been left to repos. However, there is already a shortage of treasury bills, the prime, vital collateral of nearly all post-2008 repo funding arrangements.

QE is nothing more than an extraction of those bills (and notes), creating that shortage in the first place. So while the primary dealers are loaded up with Fed-created bank reserves, they are not forwarding them to the wider marketplace out of well-founded fears of PIIGS exposures and currency mismatches between assets and liabilities. Despite an ocean of liquidity at the center, the wider system is now a desert. The Fed is held hostage by the operational realities of the design of the Federal Reserve system.

Should the Fed embark on a new QE program today, it would simply extract more of that vital collateral, exacerbating the shortage to the point of significant voluntary capital destruction – banks would be forced to take on t-bills at greater and greater negative rates. This kind of situation is purely deflationary, and nothing scares Bernanke more than that dreaded d-word.

As long as the unsecured markets remain in limbo, and they will as long as the global banking system is hiding its problems, the Fed CANNOT launch another round of QE, no matter how much Bernanke might want to. In the calculus of monetary primacy, the banking system will win every time, even at the potential expense of stocks and rational expectations.

So the Chairman is forced to jawbone stock investors into believing QE is not yet appropriate (they are constantly monitoring the economic situation), but is still imminent. Meanwhile, the Fed is actively engaged in expanding the reverse repo program to help alleviate the bill shortage. While no one was looking, it has taken its aggregate of reverse repo transactions to nearly $100 billion, from only $65 billion at the beginning of August.

Reverse repos are an exit strategy, not monetary accommodation. But, in the context of the wider wholesale market freeze, reverse repos expand the amount of treasuries, especially bills, available to be used as collateral by financial institutions outside the primary dealer network. As much as the Fed adheres to flawed ideology and oft-times inconsistent theoretical constructions, it is not likely to engage in monetary programs that are directly contradictory. Reverse repos and QE would cancel each other out.

The cue for more QE, then, is t-bill rates. If the shortage resolves itself at some point in the coming weeks, then the green light is on. There is no doubt that given that green light, Bernanke will take it – he has to if for no other reason than monetizing the debt (which may not be a problem right now, but it will be at some point). The question for September is, among other pressing concerns, whether or not the unsecured markets thaw enough to remove the squeeze in repo collateral. If that does not happen, stocks are certainly not positioned for a second consecutive episode of crushed QE expectations.

It may not matter anyway. The selling we saw in early to mid-August was precipitated by the banking squeeze to begin with. Should that intensify, the expectations of stock investors outside the general banking system will be the least of our problems. For now, Bernanke’s mystique will be tested in the coming weeks. Moral suasion is good for the textbooks, but it usually has little use during a real crisis.

Ben, the two of us need look no more We both found what we were looking for With a friend to call my own I'll never be alone And you, my friend, will see You've got a friend in me (you've got a friend in me)

Ben, you're always running here and there You feel you're not wanted anywhere If you ever look behind And don't like what you find There's one thing you should know You've got a place to go (you've got a place to go)

Monetary expansion (ie debasement of the dollar) does not have to occur only at the short end of the curve... The Bernank can very easily monetise the debt by buying long dated treasureies, agencies, or mortgage bonds... thus also achieving the objective of lowered long term rates for US corporations and household mortgages.

thus also achieving the objective of lowered long term rates for US corporations and household mortgages.

Lowering long-term rates for mortgages is irrelevant at this juncture. Those who would be candidates for refinance are either underwater or already at 4-and-change percent. Squeezing mortgage rates to 3.25% isn't enough for a refi wave.

As for corporations - who can refinance - all that would do is further inflate off-shore accounts steeped with cash that businesses don't want to repatriate for tax reasons.

Bottom line: massive, massive heaps of dollars being kept out of circulation. All spring-loaded for a REAL dose of inflation when the currently-leaking, dollar-confidence dam finally gives way.

Monetary expansion (ie debasement of the dollar) does not have to occur only at the short end of the curve..

And indeed, it did not. I have a problem with the author's contention that the problematic issue here is an artificially induced shortage of t-bills for collateral; QE2 sucked out the belly of the curve (notes) rather than bills. I would like to hear his viewpoint absent this assumption.

I am reading a lot of speculation about a hypothesis... in other words, hot air...

Bernanko left the door open to anything at the next FOMC meeting and for good reason...

The situation is changing hourly, not daily, not weekly, not monthly, hourly!

No way Ben knows what is going to come out of the next 2 day FOMC meeting. The Fed has been playing for an hour at a time.

Ben, and his Fed cohorts, are hoping that Oblammer takes some meaningful action on the fiscal front before the next FOMC meeting...

That is the reason for the delay, imo... If you don't believe this then explain all the blather emanating from the Fed governors in the last few days about 'the Fed can't do it all, we need fiscal help'... The Fed is near the end of rabbits in hat and is scared... for good reason...

If Oblammer doesn't announce some helpful fiscal policies in his upcoming speech... and how can he without support from congress... well, look for more 'experimental economic policies' from the 2 day meeting...

No matter what is done we are screwed in the long run... the fundamentals are not going to be changed in the next month... the world economy is still screwed... The real choice is still what it has always been... write down the bad debt or suffer the fate of Japan...

I don't think it is vanity. The Bernank works for the superelite bankers, any move he makes will be done to increase their wealth. His delay in QE or whatever the hell he is going to do is done to allow the bankers to take a position, probably in the opaque, unregulated CDS market before he announces intervention and they rake it in. Like taking candy from a baby. I think you are a little stupid for attributing this to vanity, the Bernank is a patsy who is told what to do. I agree with you that destroying the currency doesn't matter to them, it is just another opportunity to transfer wealth from the sheeple. Politicians won't stop it, they were bought years ago.

He works for the government just like the Federal Reserve is a government agency. He works for a bank. One of his major roles is to keep the goals of the government and his bank in strategic alignment.

You can put up that link as many times as u like but I aint clicking it.
Why ? I don't recall reading anything sensible by you, including the drivel u've posted above... U were in Korea ? Fuck u , i was in nam then cambodia past the doh lung bridge...
And judge dredd slewie, our newly appointed hard nut sez ur a troll.
So earn my respect and I'll click ur link mofo

it seems he wanted to kick the can just past the 9/5 obama stimulus speech to use fiscal policy to award cash to the people and the rahrah patriotic sho for the 9/11 anniversary to follow with the one two punch rationale of more money printing. by then there should be enough money destroyed to justify a new round of printing.

There won't be any more elections. The S will HTF well before then. The Bernank knows this.

The author asks: "So why does he wait?". The Bernank is simply waiting for pre-planned events to unfold.

For example, the UN is voting in the next few weeks on accepting a State of Palestine into the world body. This is somewhat problematic, given that the people of the "West Bank" would then be represented in the UN by two competing member states claiming simultaneous sovereignty over them. Ergo, the Israelis must now quickly "accept" a Peace Plan that requires them to retreat behind pre-1967 borders and hand over Jerusalem to NATO or UN control ... something that the religious zionists have strenuously resisted all along, while the luciferian (labour/sabbatian) zionists have been working behind the scenes all along for just such a suicidal settlement.

Since the luciferians currently control both Israel (PM Nettanyahoo, President Peres and "Defence" Minister Barak) and the White House (Obomber, Hillarity, Geithner, Panetta, Rice and the rest of The Hill Gang), Israel WILL accept the "peace" plan and Palestine WILL be accepted into the UN. At which point all hell is destined to break loose in the sandbox.

Good-oh. That is how the plan is being sold: "Nothing to worry about"!

However, the handover of Jerusalem to NATO control also means restoring it to the Holy Roman Empire under the "King of Jerusalem" and Bilderberg kingpin, King Juan Carlos of Spain (who has been VERY active lately in shuttling between various power centres). This will then be used to incite some religious backlashes that will quickly see the religious jews and fanatical muslims at each other's throats at the first sign of [an inevitable] false flag event ... perhaps an "Israeli" attack on Mecca, Medina or Al-Aqsa?

I'm an atheist and can only look at these religious squabbles with abject amusement, but the parties involved are deadly serious and the outcome of these ancient and ongoing "holy wars" affects us all.

So.. as an atheist do you believe you are an athiest. So if you believe you are an atheist you have a belief in nothing but then a belief in nothing is actually a belief in something, I'm just saying...

"It may not come as surprising news to many of you that the United Nations doesn’t approve of our Second Amendment. Not one bit. And they very much hope to do something about it with help from some powerful American friends. Under the guise of a proposed global “Small Arms Treaty” premised to fight “terrorism”, “insurgency” and “international crime syndicates” you can be quite certain that an even more insidious threat is being targeted – our Constitutional right for law-abiding citizens to own and bear arms."

I agree with you, 100%, SW. TPTB will definitely be disarming the planet -- and particularly the US -- before TSHTF.

I believe they are on a timeline to have the ME kick off some holy blood letting within the next few months, followed by an extension of the EU into an exhausted MENA next year, followed by a military clampdown on the disarmed US later next year, followed by a merger of the enlarged EU with Russia-China into the NWO. They will do "whatever it takes" to keep the EU together until after the fall of the US (which is why I would like to see some European and American sovereign states secede from their respective Unions to thwart the globalists).

There are other things also going on behind the scenes. For example, the Sabbatian (ie. Luciferian) Zionists have been supplying Qaddafi with mercenaries to prolong his war against NATO (while Israel is officially a NATO partner!). They must now have been withdrawn -- on schedule -- to allow NATO to finally finish off Qaddafi and move into the next phase in Syria-Palestine next month. This deliberate prolonging of the war in Libya has allowed NATO to destroy Libya's extensive infrastructure and also build up more firepower in the area, ready for the next phase against the Shi'ites and Alawites of Iran and Syria.

The Muslim Brotherhood and Al-Qaeda are both captive pawns of the Luciferian Globalists ... as are all the secret services that variously act for and against their respective governments, depending on the needs of the globalists. Nothing is as it seems.

Green from me, I can't believe this is all coming to pass... It was not always like this , although some would say it has.
I believe every 100 years or so the oligarchy believe it is time to steal all they can with no respect and with pure arrogance, we are in those times now. We can be glad we have each other to learn from, I am humbled by some of the insightful posts here

While you're plugging away at your "science", please answer the most central question of all related to man-made climate change: why is it you and your liberal hordes so desperately want it to be true?

No need to worry! The greatest military the planet has ever seen can't even disarm Afghanistan! I'm sure disarming the US population would be an IMPOSSIBLE feat to accomplish. I'm more petrified of the survellience we have. Soon, drones will be monitoring us........we have to find ways to counter this!

Obama has had the bill on his desk to allow the pipeline from the oil sands to the southern states and will not sign it. There would be a lot of jobs created from that project and it is something the US needs. Is Obama so fucking stupid that he thinks the US can run without oil over the next couple of decades? I guess its better to send the money overseas to the fucking A-rabs so they can fuck each other, and the world, up some more.

Get the natural gas wells flowing and create a shitload of jobs switching vehicles to NG and using domestic fuels. Also will reduce the CO2 emmisions but the environmentalist can't see the forrest. I hope they all walk to their fucking Al Gore demonstrations, the hypocritical cunts.

Until that golf playing idiot is gone, the US does not have a chance. It's also time to just say fuck you to Wall Street, Warren Buffet, affirmative action, Nancy Pelosi, Mitt Romney, the EPA, PETA, BET, and anything else that gives any sort of advantage to a particular group that doesn't fucking deserve it.

How about everyone learns their responsiblites and not just their rights. Man am I sick of paying for useless people.

Canada might not be overseas, but you'd still be sending the money across the border by buying Canadian crude ... to get out of the trap of the twin deficits the US has to become energy independent, and the pipeline doesn't help there.

Obama fancies himself another FDR, who was of course, a complete and utter failure, a dictator, and a micro managing fool. If you think Obama is EVER going to decrease regulation, you are in for disappointment.

Obama wants to regulate everything but his power base and the finance industry.

The previous group of idiots in power wanted to deregulate everything, especially the finance industry.

He laughed about knowing nothing about economics and engaged in every egg headed idea with his Ivy Leage posse from price fixing to wage fixing. He doled out government largess where he needed it, in the predominently Republican Mid-West where he desired votes, and left the poor black share croppers of the deep South, where he had all the votes he needed, to starve. Under his administration they burned wheat crops to shore up prices while they were also importing wheat. The same goes for other props, milk they poured out onto the ground, and the millions of farm animals they killed to raise prices. He would sit in the oval office every morning and "determine" what the price of eggs and other things should be. He was surrounded with a bunch of thugs that used the powers of the federal government to do whatever he wanted. And what he wanted ran this country into the ground for over a decade.

Checks and balances weren't good enough for our soverign. When the Supreme Court found that his scemes were patently unconstitutional he threw a tantrum and tried to expand the size of the courts so he could pack them. Does this sound like someone who respects the Constitution?

Most importantly, he created the vast regulatory powers of the federal government which have utterly destroyed our economy. Failure? Yeah, I'd say that was quite a record. Of course, you probably never heard any of this since the winners write the history. You know, the MSM? They are trustworthy, right? They think he's great, that should cause you concern. The danger certainly wasn't missed by Eisenhower, who warned about the dangers of centralized government and the military industrial/complex. He must be rolling in his grave now.

I don't expect you to believe me because of all the disinformation today. You probably think I am some partisan in love with Republicans, but the last few years should have taught us that neither party has our best interests at heart.

FDR is directly responsible for much of our problems today. For example: The Congressional minutes clearly show that they knew during debate that Social Security was a Ponzi scheme that would one day collapse, but it was FDR's pet project so he crammed it through, just like Bush's Prescription Drug Plan, or Obama's Health Care Reform. They are all criminals, Republicans and Democrats, and FDR was their king.

Ignoring the FDR angle for a moment ... if congress thought at the time it was a Ponzi scheme they were as idiotic as the current congress.

Social security is for the most part a pay as you go scheme (the trustfund is just there to smooth over funding gaps). With a steady increase in the number of years lived past pension age the amount of taxes going towards social security will have to be increased just as steadily, but that doesn't make it a Ponzi scheme ... it simply means each successive working generation has to sacrifice a larger percentage of their wealth to maintain the system as long as people keep living longer while receiving social security. A massive injustice according to the average objectivist/anarcho-capitalist, as is all wellfare, but still not a Ponzi scheme.

Oh I dunno, total collapse of the economy and widescale riots seem a whole lot more painful than gold occasionally being manipulated down. I see no upside to the collapse coming sooner than later. The debt being build is just so much paper, which will burn with everything else in the collapse ... so how is delaying the collapse by printing more paper a bad thing?

As long as OPEC is willing to take paper for oil and China paper for big screen TVs lets keep the dream going, it's so much better than the alternative ... however inevitable.

Because the longer they delay it the worse it will be. Tensions will continue to rise. Frustration and anger will continue to mount. And eventually those riots will come regardless. The sooner it comes apart the sooner we can start to rebuild.

The debt being build is just so much paper, which will burn with everything else in the collapse ... so how is delaying the collapse by printing more paper a bad thing?

Ding!!! We have a winner, and today's big brain award recipient is Marco.

TPTB are squandering trillions to kick the can because they know it's just funny money. None of it will be paid back. The only long term thing they are doing is buying gold, because they know the only thing that will matter when this is over is how much gold they have in their vaults. Let's hope they succeed, otherwise we will see the violence and wars trollboy has predicted (along with thousands of others, Captain Obvious, because history teaches us that always happens).

The only negative repercussion of kicking the can is the citizens of the poor countries are being eaten by inflation and the citizens of the rich countries are seeing their savings being destroyed by the debasement of their currency. BUT, that is part two of the kick the can game. Part One was for central banks to buy up all the gold. Part Two is to reduce the standard of living in the Western nations so that a more realistic world economy can be instituted. The last one saw outrageous disparities in the standard of living, financed by Western fiat and the reserve currency.

That can't continue.

So what is also going on right now is not only central bank gold purchases for a new monetary system, but countries where there's low standard of living strongly encouraging their citizens to buy gold, and Western nations discouraging their citizens to buy gold. The central bankers have decided your fate. There's an active campaign to bring the two standards of living closer together at your expense. The victims of this campaign will be those who don't hold PMs.

You're expecting the obnoxious, pompous asshole leader of the fractional reserve banking system that took trillions of OPM & lost it gambling on inflated housing loans which they broke up & sold to investors for a fee, to fix the real economy? When the intended purpose of the fractional reserve banking system is to mediate loans between savers & producers to grow the real economy.

This same asshole who printed out of thin air & loaned trillions to these fractional reserve banks at 0% & paid them interest to keep the loans at the fed to repair their balance sheets & keep the trillions from the real economy. And we all knowthe asshole monetized the debt.

Without a time machine, the world economy as we know it cannot be fixed. All they can do is kick the can and try to hit the restart switch. Who knows if they will be successful. Their plan involves gold, a lot of it. If you have it an they succeed, you will be a winner. If they fail and you have gold, you will be a winner.

It's not that Bermonkey is an idiot, but that central planning (least of all the economy) does not work. That should be clear now, even to bearded economists.

I think it's a bit of both. In their hubris, they thought QE, QE2, and QE lite would work, because that voodoo always worked in the past. Sometime around the end of 2009, I think they realized they had screwed up big time, because that is when central bankers started stacking tradition, all at the same time, all around the world. (a coordinated run for the life boats).

Some were idiots. Some were baffled by their own bullshit. Some, like Greenspan, knew better but went along with the game because he knew on single man was powerless to change the system.

Nailed it. I have been waiting for someone to fit the recent reverse repo announcement by the NYFed into the bigger picture. This does so supremely well. We are so close to the edge it is taking my breath away.

This article is correct. The primary problem we have is highly concentrated liquidity in the hands of the biggest risk takers in the market, and the same hands that no longer really need it. The junkie went into withdrawal, so instead of dishing out the tough love or demanding a stint in rehab, central banks simply dished out more heroin.

The Fed was very, very fast to swap crap at par in exchange for cash (liquidity providing), but there is no way to reverse this. The cure for QE-induced problems are repos, but nobody in their right mind is going to do the reverse trade at the original price because everybody knows how crap that stuff is. At the best, the Fed can swap back some high quality stuff (TYSs), but it's stuck with a lot of the toxic ABS. If a repurchase is going to happen, then the counterparty will only be prepared to pay real market value, meaning the Fed has to take a huge write-down which is exactly the same as turning existing, supposedly sterilizable injection into non-sterilized inflation.

Either that, or it pushes the loss off its books onto the Treasury and asks taxes to pay for it, socializing bank losses. In the latter case, the effective inflation is basically the same because the real economy must deflate to cover losses (as taxes are taken in) meaning that the relative state of the real economy and the ponzi finance economy is the same either way: banks get richer, society gets poorer. An example of this happening is the govt recently asking for ideas to deal with the large inventory of defaulted upon homes underpinning toxic MBS. Part of that is the Fed looking for an "out". A way to push shitty assets back to the GSEs / government.

In the subsequent environment, banks use their position of greater relative wealth to purchase firesale assets from the real economy, coming to own more of the real world. The only other option is to go Japanese and sit on that stuff forever in the hope that bubbles eventually regrow and repurchases can be conducted at the original price. It might take 20 years, more likely, it will never happen at real equivalent value (maybe nominal, but then that's actually inflationary if you think about it).

Absolutely none of this is under democratic review by the masses. It's 100% pure, unadulterated oppression, the very opposite of the "freedom" that Americans are lied to about on a daily basis and sadly seem happy to parrot back.

Maybe owning all those toxic CDS by the FED will prove to be very profitable by the FEd.

The way I see it , in times of hyper inflation, real estate is also hyper inflated. So what better way to hold it's loot gotten over the February than plowing back into "shitty deals" that nobody wants.

So in the end, after the new currency is announced, the FED will own most if America by design.

In a box indeed. As I said earlier today the Fed has a dual mandate and it has failed utterly at both. Unemployment is over 16% and getting worse, inflation is double digits unless you want to buy a house.

Backwardation on all of us, get ready, it is going to suck.

There is a bright spot though. Some people remember what it was like before the whole economy depended upon smartphones and tattoes. There are a few of us left, and we can teach you about integrity, honor, ethics, and service, even love for the people near you.

OK, kidding, that is all as dated as my grandfather's little rubber change purse that he used to piss off everyone behind him in line at the market because he was born wealthy and lost all in the last great depression.

Ever the Baby Boomers have wanted recognition for a job well done. The only recognition they get is from their peers. It's one big circle jerk of Baby Boomers inflating each others ego. They have failed to lead, failed to pass on the wisdom given by their parents, and failed to recognize the fact they have failed. AND after all that, they want 'just' compensation for all their 'good' deeds.

Bigotry is NOT discernment, it is judgment of differences discerned. One can discern that of three men on a bench two are white and one is black, without making any judgment about them, but a bigot simply sees two white men and one oversexed, lazy, subhuman (fill in the epithets of your own personal stereotype) same for gay people, Jewish people, poor people, young people, etc.

The baby boom was (and is) a demographic cluster fuck for sure, but they did not spontaneously will themselves into existence, their parents begat them and their grandparents begat those. I am sick and tired of the assholes that think our existing is entirely the fault of the boomers themselves. I cannot help the fact that I was born in May of 1958 along with about a million other babies, I had zero say in the matter. Should we have been, should we still be selfless and en masse defenestrate our worthless selves from the nearest skyscraper? Yeah? OK, but you jump first.

Baby boomers were not the generation that gave us any of the wars in our history, yes we are expected to fight them as cannon fodder, but Obama is the first president that qualifies to be called a boomer. (BushCo II was born July 1946 so some would include him, but if so he would have been among the very first few babies of the generation, I do not since the boom actually began 9 months after the cessation of all WWII hostilities and return of the troops). There have always been bigots, but there have not always been demographic fuck ups like the baby boom. And since bigotry is just a feature of ignorance, willful or otherwise, when we blame bigots we are really just blaming those that either want to be ignorant or are too stupid to be educated. Then there is a third class that is neither stupid nor unwilling to be educated, they are the misanthropes who are for whatever reason so bent by emotional damage that they find only hate sustains them, thus they join the republican party or gain 300 pounds and start a fascist radio talk show.

I have been a baby boom citizen for 53 years, in that time I got an education at great expense, worked as hard as anybody in any previous generation, and became a member of the generation that was the first to know what it is like to have less security than ones parents. I have never made a reasonable income for my efforts to better myself, and I don't blame bigots for that though a few did play their role as asshole bosses, I blame the greedy corporate rulers that have crashed America into a big old historic oak and replaced it with a shiny new Roman Empire. Baby boomers might have started to become adults a couple of decades ago, but they are only just now getting into positions of leadership, soon it will be we who make or break our collective futures, then you can either applaud us or berate us, but till now none of the errors of history have been ours. And we certainly do not deserve the raw treatment we have gotten just because we were born.

There are going to be difficulties associated with this demographic disaster not of my generation's making, some can be eased while others are just going to have to be tolerated because they can't be changed. That does not mean we are any less human or any less committed to integrity or ethics, quite the opposite, we are one of the largest generations percent-wise that are not willing to be told how we must live by paternalistic butt wipes like our previous generations did. Every generation has rebels, as well as subservient dorks that must be lead because they cannot stand on their own otherwise. But, every generation has been human, and born with inalienable rights whether you like that or not.

No doubt, if the creator of Uriah Heep, Seth Pecksniff and old Fezziwig, were alive today and turned his thoughts to the obscene and brazen energy that this place runs on, he'd make all but the coarsest here blush to their ears.

Why this focus on t-bills to explain Bernanke's choices? why can't the rest of the curve be used? Interest rate risk is practically non-existent, if a bank engaged in a repo were to go down, there would be a rush to treasurys.

He works for an evil organization, therefore, he is evil. All the angels in Heaven who joined with Lucifer are now evil. Yes, Ben is now damned.

I don't agree he is stupid. He may have been naive in thinking the first few rounds of QE would work, but QE was his mandate. After that, his options were few. He's done a pretty good job of kicking the can (in a hurricane) and that was genius from the perspective of his owners.

The real evil person who set up this crisis was Greenspan who knew exactly what he was doing. After he raised interest rates under Bush senior, he saw the light and saved his own career by destroying the economy and sold his soul for the title of "Maestro." He is utterly damned.

If Bloomberg is running a story that not only documents the fed "gifts" but refers to them in the derogatory as aristocrats then I am thinking Michael is prepping for a run at the Oval Office. But if so it is probably because that slime ball thug with a bible Perry would sink any hope of a GOP win next year.

He would actually be about the best candidate in the field too as far as I am concerned. Mayor of New York automatically makes him more qualified than Obama was when he started in the job. He has managed to run the city as a moderate but with the ability to respect diversity. He certainly has enough money to run a campaign without having to sell his favors to the wealthy gatekeepers of the upper class. In fact he knows and handles those very gatekeepers daily, they respect him even if he seems like an out and out Bolshevik to them.

I would like to see Paul win as an outsider and prove that our political system is still viable, then watch the theater as he tries to challenge TPTB over the Fed. But I fear that is wishful thinking, age is an issue for him, as well as some rather strictly held Texas protestant theocratic ideals. I think America is burned out on Texans in office for now. Though of course the fundamentalist right love those pigs. But in spite of all the racket they make they are a small minority of voters, even in their own party they are a minority. Most republicans I am friendly with want the far right to dry up, just as Obama would love for gay people to stop trying to ruin his career by existing.

Bernanke is more then just in a box. He has run out of bullets - conventional weapons. The players, with their infinite optimistic view of the war (market economy/wealth transfer system), interpreted this as a new peace agreement. As we all know this is far from the truth. This is just a calm period before the unconventional bloody hand fight where, at some point, the general population will start joining. And when this happens the only "sensible" solution will be the inflation EMP and resetting the system on a new plain level with a new trust in something. Finally for every complex system there is a reset point or death. The death is not an option here so in order to survive the system will have to evolve to a more stable one ( well at least for the first 10-20 years ).

I think this is a key point. In a globalized ecomnomic/political system, American lifestyles and expectations are unacceptable. The world can have a fabulously wealthy elite, but they can't be concentrated in just one "province."

I'm beginning to wonder if Uncle Ben was the cause of all this volatility the last 2 years after 2008. I mean, how else is he going to get his money back from all this QE money he's pissing away? Yeah, the FED has alot of toxic assets on the balance sheet, but i bet he made trillions with this volatility. So basically he screwed both bulls and the bears. Now, if he does this QE3, he'll be using the houses money. Man, have to say he's a genius even though it hurts me to say it.

QE 3 is already in place with ZIRP for the forseeable future. He needs more time to come up with the next hairbrained QE4. Sept should be interesting. He will at some point realise if a store can't sell any product because consumers don't have any fiat you don't just stock the store with more unsellable stuff. His hands are tied so he will push treasury into massive injections of cash into the hands of consumers. The new policy will be knicknamed "trickle up", as opposed to "trickle down" which never worked cause all gains just trickled out of the country. You never know, he could become a hero to millions if by chance the minimum wage was jacked up to the average of the public sector (120,000). After all, people in the private sector, who actually produce something, should be worth at least as much those who do nothing of value for the country. No need for foodstamps, wellfare or dealing drugs. Thats a policy i could support.